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Condensed knowledge for 2008-03-15

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Thoughts

Price wars are bad for everyone

I believe a lot in equitable pricing. A product’s price should be able to net its creator a decent profit — not a huge profit, not a tiny profit, because that makes it hard to go on, and certainly not a loss. That’s why I’m really annoyed with the recent price wars in the hardware industry. Scoble reports tonight on his blog that Seagate didn’t meet its projections in this last quarter because of horrendous price wars among hard drive manufacturers. An unnamed manufacturer was willing to lose over 100 million dollars just to maintain their foothold in the market. Beta News reports that AMD lost half a billion dollars in this last quarter, and that’s directly related to its price war with Intel.

This is bad. In the end, what was gained by the price wars? Companies lost money, their employees were overworked (to meet R&D and production deadlines), and everyone ended up stressed out. Did any company emerge as a winner? No, they didn’t.

I would love to see the frenetic pace of business and competition slow down to something more rational, more sustainable. I for one can imagine how stressful it must be to work in companies where you’re constantly pushed to meet deadlines, and more deadlines are coming at you down the pipe. I treasure the sense of accomplishment that I feel when I’ve just finished a project and know I’ve got a lull before the next one lands on my desk. No such thing goes on at these companies. Not only do they constantly have to find ways to tighten their belts and “restructure” by firing people, but at the end of the day, their bank accounts don’t really show the results of their efforts. What’s worse, they may even end up in the red.

I for one am willing to pay a little extra for my hardware, if I know that the pace of work at these companies is rational, and that employees there are treated well. Remember, we are all employees in one way or another. How would we like it if we had to work extra every day or got fired just so some Joe Blow can brag that he got his hard drive for $20 less?

[Added 4/20/07] Lest you think the consumer wins, think again. What we as consumers get out of this is bad design or bad quality control or bad customer service and support, or any combination of these three. The companies cutting prices have to skimp on something. You can’t rush things, cut prices AND provide a wonderfully designed and reliable products with great customer support. If you don’t believe me, see Julie’s comment below.

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AMD plans "4×4" platform computer

In a move that’s sure to make other computer makers uncomfortable, AMD revealed it’s working on a 4×4 platform, which will pair two dual-core AMD chips with two dual-GPU graphics cards. This will be a boon to gamers, and I’m sure it will give the new Apple Power Mac successor a run for its money when it comes to graphics and video-crunching power. Engadget has the details.

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